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CCS 12 XYZ Example

The CEO discovered that actual contribution margin for Q4 2002 was lower than budgeted. Actual worldwide handheld game sales were 500,000 units, higher than the estimated 400,000 units. While actual unit sales were higher than estimated, contribution margin was lower due to changes in selling price, variable cost per unit, and sales volume for each game X, Y, and Z compared to budget.

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Debasis Mohanty
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86 views1 page

CCS 12 XYZ Example

The CEO discovered that actual contribution margin for Q4 2002 was lower than budgeted. Actual worldwide handheld game sales were 500,000 units, higher than the estimated 400,000 units. While actual unit sales were higher than estimated, contribution margin was lower due to changes in selling price, variable cost per unit, and sales volume for each game X, Y, and Z compared to budget.

Uploaded by

Debasis Mohanty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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XYZ Handheld Games

ABC Games produces three handheld games X, Y and Z. The


CEO has discovered that the total Contribution Margin (CM) for
the 4th quarter of 2002 came in lower than expected (budget).
It is your job, as the senior vice president of marketing, to explain
why the actual results were different from the budgeted. DEF
Research estimated 4th quarter sales of handheld games worldwide
to be 400,000 units, however, actual 4th quarter sales were 500,000
units.

BUDGETED OPERATING DATA, 4th quarter 2003:


Selling VC / unit CM / Sales
Price unit volume
(units)
X $379 $182 $197 12,500
Y 269 98 171 37,500
Z 149 65 84 50,000
Total = 100,000

ACTUAL OPERATING DATA, 4th quarter 2003:


Selling VC / unit CM / Sales
Price unit volume
(units)
X $349 $178 $171 11,000
Y 285 92 193 44,000
Z 102 73 29 55,000
Total = 110,000
Calculate all of the CM variances for the 4th quarter.

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